Every business needs advice to grow and thrive, from Fortune 500 companies to startups. I believe that the best way to accumulate and manage this necessary advice is to have an advisory board, and more companies are utilizing them every day. Advisory boards allow you access to advice from top experts in their respective fields.
As an entrepreneur, venture capitalist, speaker and member of seven advisory boards, I’d like to discuss why advisory boards are important, as well as what to look for in advisory board members.
Members of an advisory board focus directly on certain aspects within the company and use their expertise in ways the company may be limited, whether it be due to time, money, formalities or approvals. This advice provides a third party perspective — an important point of view that combats emotional decision making. By having an advisory board, C-level executives illustrate their responsibility and willingness to include multiple perspectives.
In times of turmoil, when a company is facing hard decisions, a CEO or CFO can call their advisory board members in and utilize their expertise to make wise decisions for the company. A good advisory board should complement and reinforce the company it supports. Investor confidence is inspired by a responsible and well-rounded team. Advisory boards also aid in expanding your network, through both their advice and access to their own business circles. Advisory boards are an integral part of many successful businesses and their benefits are too great to ignore, so look into assembling your experts for the future of your company.
The best advisors analyze the entire operation of a business. From management to supply chain, advisors dissect every part of the business, giving valuable advice that they’ve accumulated throughout their own careers. Because the advisor has experienced much of how the business world operates, their already acquired expertise saves the business time, and thus money. Problems are dealt with quicker and more efficiently, allowing the business to return to normal operation.
Something many business owners and C-level executives don’t like thinking about is a crisis. Every business will experience a crisis at some capacity. Having advisors to advise on mitigating damage can mean the difference of hundreds of millions of dollars or more. CEOs don’t need to know everything — they just need a network of people with different expertise.
However, like any group of people, advisory boards must have structure in order to be effective.
Craft guidelines for the group. An advisory board without a mission, guidelines or expectations is just a group of people with loud opinions. Your advisors should understand the need for structure and welcome efficiency guidelines. By creating relationships with advisors or potential advisors, CEOs will have a better understanding of how to most effectively approach them. One advisor might prefer to work systematically, while another might favor speaking about the bigger picture.
To find advisors who will effectively work within a company, have clearly stated company guidelines in order to efficiently function as a cohesive unit. Prioritizing attention to detail is one of those said guidelines that should be of the utmost importance to both advisors and the advisee company. Attention to detail can help in all corners of life, by becoming more conscientious of yourself and what surrounds you, which can aid in the advice you give and help avoid mistakes, small or large.
Moreover, having strong communication skills is vital to a successful relationship between an advisory board and the advisee company; frequent communication allows board members to spot upcoming problems and relay solutions to the advisee company accurately.
Get to know your advisors and how they work. Not only will dealings become more effective, but you might make long-term business relationships that last longer than their term as a member of your advisory board.
It’s important to understand the people you work with, and the best way to do that is to spend quality time with prospective advisors. Whether it be over drinks, dinner, golf, or a simple conversation — the best way to choose the right advisor is to get to know them personally.
Understanding their past experiences is valuable as well because it can give you insight into the prospective advisor’s methods and business acumen. Additionally, seeing how they care for the relationships they already have, business and personal, is a great way to gauge if a potential advisor would be a good fit for a company.
Ultimately, those who serve on advisory boards strengthen companies and help them succeed by providing input via their experience and knowledge that the executives may not have or know how to accurately utilize.